Best of the Week
Most Popular
1.Election Forecast 2015 - Opinion Polls Trending Towards Conservative Outright Win - Nadeem_Walayat
2.UK Solar Eclipse - End Time Sign, Judgement Day, Doomsday! - Nadeem_Walayat
3.Gold And Silver - When Will Precious Metals Rally? Not In 2015 - Michael_Noonan
4.Preparing for the Next Stocks Bear Market - Forecast 2015-2016 - Gary_Savage
5.Is a Stock Market Crash Imminent? - David Eifrig
6.Gold Price Slumps as US Dollar Soars, What's Next? - Nadeem_Walayat
7.US Dollar Forex Pairs and Gold Chartology - Rambus_Chartology
8.Election Forecast 2015: The Day Labour Lost the General Election - Nadeem_Walayat
9.The ECB Should End QE Next Month - EconMatters
10.Silver Price Poised to Surge - Zeal_LLC
Last 5 days
Reflections in a Golden Eye - Gold Market Rejection, Repatriation and Redemption - 28th Mar 15
Stock Market Inflection Point - 28th Mar 15
Gold And Silver - What Moved Price? Bab el-Mandeb And Uranus Square Pluto. What?! - 28th Mar 15
Stock Market Investment Parachutes; Do You Have Yours? - 28th Mar 15
Peak Gold Misunderstanding, is Gold About to Run Out? - 28th Mar 15
Deflation Watch: Key U.S. Economic Measures Turn South - 27th Mar 15
The Hard-Earned Truth About Recreational Real Estate - 27th Mar 15
Bitcoin Price Still in Important Territory - 27th Mar 15
Stocks Bear Market Conditions - Index Market Range Warning - 27th Mar 15
BEA Leaves Q4 2014 U.S. GDP Growth Essentially Unchanged at 2.22% - 27th Mar 15
Brazil Economy Victim of Vulgar Keynesianism - 27th Mar 15
Gold to Fuel Silver Price Upleg - 27th Mar 15
Gold and Silver Stocks Will Rise Again! - 27th Mar 15
Risk of ‘World War’ between NATO and Russia on Ukraine as Yemen Bombed - 27th Mar 15
FOMC Minutes Turned The Gold Tide - 27th Mar 15
Sheffield Hallam Election Battle 2015 - Lib Dems Go to War Whilst Labour Sleeps - 27th Mar 15
Gold Effect On Mining & Shale Wasteland - 27th Mar 15
How Stock Investors Should Play the 2016 Presidential Race - 26th Mar 15
MidEast Energy Alert: Why the Crisis in Yemen Could Get Ugly Very Fast - 26th Mar 15
Stock Market Downward Spiral of Dumbness - 26th Mar 15
The Monetary Approach Reigns Supreme - 26th Mar 15
Stock Market Large Gap Down, Despite the Algos' Push Back - 26th Mar 15
Crude Oil Surges, Gold price Spikes as Middle East Tensions Escalate - 26th Mar 15
The U.S. Housing Market Recovery Is Fabricated Optimism - 26th Mar 15
Why Yemen Is The Next Saudi-Iranian Battleground - 26th Mar 15
The Crude Oil Price Crash and China Economic Slow Down - 26th Mar 15
Global Financial Markets Are More Distorted Than Ever Before - 26th Mar 15
One More Stock Market Rally and Then a Huge Drop Expected - 26th Mar 15
Danger Will Robinson - Stock Market Crash Warning - 25th Mar 15
Learn the Basics of Corrective Elliott Waves - 25th Mar 15
Why CNBC Is Hazardous to Your Financial Health! - 25th Mar 15
Will Your Retirement Accounts Survive The Coming Tax Code "Revolution"? - 25th Mar 15
US Dollar - Americas Phoenix - 25th Mar 15
California’s Epic Drought: Only One Year of Water Left! - 25th Mar 15
What’s Wrong With Silver? - 25th Mar 15
SPX Futures Appear Weak. WTIC and Gold May Be at Max Retracement - 25th Mar 15
We’re at the Dawn of a “New Energy Age” - 25th Mar 15
A Very Weak U.S. Economic Recovery - 25th Mar 15
Zero UK CPI Inflation Rate Prompts Deflation Danger Propaganda For Fresh Money Printing - 25th Mar 15
Stock Market NYSE Hi-Lo Index Aggressive Sell Signal - 24th Mar 15
Palladium Commodity Price Forecast - 24th Mar 15
Bitcoin Price Gearing Up for a Fall - 24th Mar 15
Safety Deposit Boxes In UK Being Closed By ‏HSBC – Not Closing Gold Vaults - 24th Mar 15
Japan Short Term Gains And Long Term Disaster - 24th Mar 15
China's Fragile Evolution - 24th Mar 15
David Cameron Announces Resignation Even Before Being Re-elected, Handing Labour 6 Seats - 24th Mar 15
City of London's Ownership of American Colonies - 24th Mar 15
Stock Market Reversal May Have Begun - 24th Mar 15
Casey Gathers Top Gold Experts to Share Secrets for Making Money in Any Market - 24th Mar 15
Thoughts on The Current Crude Oil Market - 24th Mar 15
U.S. Economy Still on Life Support - What Your Governments Hiding From You... - 24th Mar 15
UK Election Forecast 2015 - Budget Bribes Fail, SNP Insurgency Catastrophe - Video - 24th Mar 15
Is Stock Market Minor Top Taking Hold? - 23rd Mar 15
Greece and EU Running Out of Time as Bank Runs Intensify - 23rd Mar 15
Stock Market Slightly Negative Expectations Following Last Week's Rally - 23rd Mar 15
This Rising Interest Rates Play Could Make You a Quick 55% - 23rd Mar 15
Platinum Commodity Price False Break Low - 23rd Mar 15
The Real Reason The American Dream is Unraveling - 23rd Mar 15
Election Forecast 2015 - Budget Bribes Fail to Impress Voters, Tory's Lose Seats in Opinion Polls - 23rd Mar 15
Silver Price Reliance During U.S. Dollar Rally - 23rd Mar 15
Gold Price Outlook Dramatic Improvement Following US Dollar Topping Action - 23rd Mar 15
Wall Street Doesn't Want You to Do This - 22nd Mar 15
The "Natural Interest Rate" Is Always Positive and Cannot Be Negative - 22nd Mar 15
Exploring The Gold Market: The Fed, The Charts. The COTS and GLD - 22nd Mar 15
Stocks Bull Market Continues - 22nd Mar 15
Gold And Silver - China's AIIB Spells U.s. Dollar Demise, Not Clear For Precious Metals - 22nd Mar 15

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

US Economy Still on Life Support

Central Bank Gold Sales Coming to an End?

Commodities / Gold & Silver Oct 03, 2008 - 04:33 PM GMT

By: Julian_DW_Phillips

Commodities Best Financial Markets Analysis ArticleIn the week ending 26th September 2008, the final week of the fourth year of the Central Bank Gold Agreement, two Eurosystem central banks sold less than 1 tonne of gold to complete the fourth year's sales. This makes a total for the year at around 345.5 tonnes of gold sold by the signatories.


The three previous years totals were as follows; year one at 437.2 tonnes, year two at 333.2 tonnes, and year three at 325.8 tonnes. So what will the final year of the Agreement bring? The 'ceiling' placed on gold sales for each year of the Agreement was 500 tonnes, a level never intended to be a target figure of sales, but rather act simply as a limit. This limit was never met, nor will it ever be.

Germany and Switzerland

Last week, two of the signatories have made announcements on future sales.

  1. Firstly, the Swiss National Bank announced in June 2007 that it had concluded the sale of 250 tonnes of gold, and said it had no plans for any further gold sales . It also said its total gold holdings were now at 1,040 tonnes, adding that it planned for no further reduction. In addition, the Swiss National Bank said it would sell 250 tonnes of gold by September 2009, as it decided that due to the rise in the gold price, its gold reserves were too high. It took up the option to sell gold from one of the signatories that relinquished this option.

  2. Secondly, the Bundesbank said it would sell no gold apart from 6.5 tonnes to the German finance ministry, as previously agreed upon. "The remaining sales quota will be offered in its entirety to other central banks taking part in the gold agreement," said the Bundesbank. Under the terms of a five-year deal between 15 European central banks, the Bundesbank was given an option to sell 120 tonnes of gold a year but has consistently offered its quota to other institutions and sold only enough bullion to mint coins [around 5 tonnes a year]. The Bundesbank holds 3,400 tonnes of gold.

These two statements confirm that two of Europe's largest holders of gold will not be selling any significant quantities of gold in the next year. France has been a seller of gold, but we believe, not a satisfied one. There are clear signs of this as the weekly sales of gold in the last few months have been so low that France will not reach the quantity it intended to sell. It still has around 133 tonnes of gold left out of the 600 tonnes it announced it would sell at the commencement of the Agreement. It appears that they made a large sale of between 25 and 30 tonnes a few weeks ago, but the drop to current levels was at a level that would have completed Switzerland's sales only . So, the question hangs in the air, have they stopped selling? With Sarkozy now President and clearly underwhelmed by the financial disasters in the States and now Europe, he is likely to not want to see France's 'crown jewels' sold off for more U.S. dollars.

European Central Bank Sales?

The E.C.B. announced at the beginning of the Agreement that they would only sell 235 tonnes, which they have already completed. However, these sales have normally gone through early in the year of the Agreement, starting on the 27th September of each year agreement year. Once they have sold, the E.C.B. confirmed in the media what they have sold and whether they will sell more or not. There is nothing to prevent them from repeating this again this year in the absence of Germany and increasing their sales above the announced 235 tonnes.

Remaining Sellers?

This leaves only three Central Banks that have been active sellers in the final year of the Agreement. All that remains of the sales targets they announced at the commencement of the Agreement are [around]:

1) France 133.5 tonnes
2) Sweden 15.7 tonnes
3) Netherlands 9.0 tonnes
TOTAL 158.2 tonnes

This is less than half the level of sales we have seen in the fourth year of the agreement. If France has stopped selling, then only 24.7 tonnes of sales remain from the signatory Central Banks over the next 12 months.

If this is the case, then it is not enough to have an affect on the gold price at all, unless the sales by France are conducted in large amounts and are dropped onto the market during opportune times [when the gold price is running up?].

Volumes bought by gold Exchange Traded Funds

To get a better market perspective, look at the amounts of gold bought by shareholders through the gold Exchange Trade Funds over the last three weeks. These amounts reached 145 tonnes, with 32 tonnes bought overnight in one amount twice in that period. We do expect this demand to continue in the face of a decaying global financial system, irrespective of the $700 billion Paulson's Package.

Available to Subscribers only – subscribe through www.GoldForecaster.com

By Julian D. W. Phillips
Gold-Authentic Money

Copyright 2008 Authentic Money. All Rights Reserved.
Julian Phillips - was receiving his qualifications to join the London Stock Exchange. He was already deeply immersed in the currency turmoil engulfing world in 1970 and the Institutional Gold Markets, and writing for magazines such as "Accountancy" and the "International Currency Review" He still writes for the ICR.

What is Gold-Authentic Money all about ? Our business is GOLD! Whether it be trends, charts, reports or other factors that have bearing on the price of gold, our aim is to enable you to understand and profit from the Gold Market.

Disclaimer - This document is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment. Gold-Authentic Money / Julian D. W. Phillips, have based this document on information obtained from sources it believes to be reliable but which it has not independently verified; Gold-Authentic Money / Julian D. W. Phillips make no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness. Expressions of opinion are those of Gold-Authentic Money / Julian D. W. Phillips only and are subject to change without notice.

Julian DW Phillips Archive

© 2005-2015 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Free Report - Financial Markets 2014